Ontario Premier Kathleen Wynne speaks to The Empire Club of Canada in Toronto on Monday, April 28, 2014. (Frank Gunn / THE CANADIAN PRESS)

Maria Babbage, The Canadian Press
Published Tuesday, April 29, 2014 12:24PM EDT
Last Updated Tuesday, April 29, 2014 4:56PM EDT

TORONTO -- By pushing ahead with an Ontario pension plan, Premier Kathleen Wynne is ignoring warnings from her own finance officials that adding new payroll taxes will kill jobs, the Progressive Conservatives charged Tuesday.

They said the evidence can be found in a government document -- dated last February -- that explores the economic impact of various so-called "revenue tools" to pay for a massive expansion of public transit in the Toronto-Hamilton area.

Any increase in payroll taxes would have the "largest negative impact" on employment, the document said.

It would result in lower business investment, relocation of business to other jurisdictions, reduced work effort and "out-migration of people" over the long term, it said.

It also estimates that raising $2 billion annually over 10 years by increasing payroll taxes for transit would cost 18,000 jobs.

The governing Liberals should take the advice to heart as they prepare to launch a provincial pension plan in Thursday's budget, the Tories said.

The Ontario Retirement Pension Plan will increase payroll taxes, which means employers won't have the money to hire more people and workers will have less take-home pay, said Tory finance critic Vic Fedeli.

"This isn't government money going in to pay for this program," he said.

Wynne dismissed the document, saying it has nothing to do with the proposed pension plan. Contributions to a pension plan aren't taxes either because they don't go into the provincial treasury, she said.

"We know that there is not enough saving that people are capable of, that people are at risk of struggling in their retirement," Wynne said in the legislature.

"So we are going to bring a plan that will allow people to have that retirement security."

Her government has already lowered payroll taxes by reducing the employee health tax for smaller businesses to help create jobs, she added.

Wynne can't have it both ways, said Opposition Leader Tim Hudak.

"So which is it, premier? Do you believe that lowering payroll taxes creates jobs, or do you believe increasing payroll taxes creates jobs?" he said. "Honest to goodness, you look like (former premier) Dalton McGuinty."

It's true that people aren't saving enough for retirement, but that's because they're struggling to find work, Hudak said.

"It's hard to put money aside for a pension when you can't pay the hydro bill," he told reporters.

"If you're struggling to get by on a part-time job, you don't have money for savings. And if you have no job at all, you don't have a pension."

The Canadian Federation of Independent Business has also voiced concern about a provincial pension plan, saying it would be a financial strain on both employers and workers.

The Canada Pension Plan's maximum yearly premiums of about $4,700 are split between contributing workers and employers; the self-employed pay the full amount.

The Liberals say they have to take action to improve retirement savings because the federal Conservatives have refused to enhance the CPP, which provides a maximum of about $12,500 a year.

About 40 per cent of Ontarians have no pension and must rely on CPP benefits, said Eric Hoskins, minister of economic development, trade and employment.

Prince Edward Island and Manitoba have also joined Ontario to explore options to enhance retirement income.